Abstract:The US Dollar shrugged off news that the Treasury Department is holding off on USD intervention “for now”. Ahead, downside AUD/USD progress may be impeded by local private Capex data.
The US Dollar shrugged off an announcement from Treasury Secretary Steven Mnuchin that the country does not intend to intervene on USD “for now”. US President Donald Trump has long made the public aware of his distaste for a stronger Greenback. The currency has been outperforming its major counterparts this year despite bets of easing from the Fed, likely owing to its status as a haven amid trade wars.
What is under “serious consideration” by Mr Mnuchin are plans to expand the portfolio of long-term bond offerings. Earlier this month, the Treasury was looking into 50 and 100-year bonds. Following today‘s announcement, the 30-year government bond yield climbed. It remains to be seen whether direct intervention to weaken the world’s most-liquid currency occurs down the road.
British Pound Sinks as UK Prime Minister Suspends Parliament
Meanwhile, the British Pound underperformed against its major counterparts on the latest Brexit developments. Overnight, UK Prime Minister Boris Johnson received permission from the Queen to suspend Parliament. This is also known as prorogation and it effectively decreases the time members of parliament have to debate the withdrawal process, increasing the likelihood of a “no-deal” Brexit.
Thursdays Asia Pacific Trading Session
It was a mixed bag for risk trends over the past 24 hours. While Wall Street ended the day higher, the S&P 500 remains within a directionless range between 2820 and 2947 since early August. Continued uncertainty over the US-China trade war is one likely cause. There have been disputes from China over whether the phone call with Trump regarding restarting talks occurred at the G7 Summit in France.
S&P 500 futures are now pointing cautiously lower heading into Thursday‘s Asia Pacific trading, perhaps limiting the scope for upside follow-through in regional bourses. The pro-risk Australian Dollar will be closely watching local private capital expenditure data. Data out of Australia has been tending to outperform relative to economists’ expectations as of late. An upside surprise may cool near-term RBA rate cut bets, boosting AUD.
Australian Dollar Technical Analysis
Taking a closer look at AUD/USD, the currency pair is once again attempting to find follow-through after closing under the March 2009 low. Positive RSI divergence is still present and indicates fading downside momentum. A confirmatory close under 0.6708 opens the door to extending the dominant downtrend. A turn higher on the other hand places resistance at 0.6827.
AUD/USD Daily Chart
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As several nations focus on enhancing their currencies, the dominance of the US dollar in the global monetary system is declining. Nouriel Roubini, also known as “Doctor Doom” for accurately forecasting the 2008 global financial crisis, recently warned that the dollar’s position as the primary reserve currency in the world is at risk. This warning is proving accurate, as the world’s major emerging economies have agreed to ditch USD for trade!
As several nations focus on enhancing their currencies, the dominance of the US dollar in the global monetary system is declining. Nouriel Roubini, also known as “Doctor Doom” for accurately forecasting the 2008 global financial crisis, recently warned that the dollar’s position as the primary reserve currency in the world is at risk. This warning is proving accurate, as the world's major emerging economies have agreed to ditch US dollar for trade!
The week ahead: US Dollar struggles to find demand
The start of November has been a dwindling moment for the general major currency market. As essential economic updates flood the surface of the entire foreign exchange market, in which most of the currency pairs especially the major pairs were greatly affected by the impact of the economic releases. However, the US dollar was discovered to have held the main currency exchange performance metrics as the central economic updates from the US region tend to have determined the significant changes that have occurred in the major currency market so far.